Competition regulation

EU court rules against Apple’s tax deal and Google’s market practices

In a significant victory for European regulators, the EU’s top court upheld rulings against Apple and Google, marking key moments in the ongoing battle against Big Tech. Margrethe Vestager, the EU’s antitrust chief, has been at the forefront of efforts to challenge multinational companies benefiting from tax deals and engaging in anti-competitive behaviour. On Tuesday, the courts sided with her in two major cases involving Apple’s tax deal with Ireland and Google’s market practices.

The Apple case, which dates back to 2016, revolved around 13 billion euros ($14.4 billion) in back taxes. The European Commission argued that Apple’s arrangement with Ireland allowed the tech giant to pay an artificially low tax rate, at times as low as 0.005%. The Luxembourg-based Court of Justice agreed, confirming that Apple had received unlawful state aid and Ireland must recover the amount. Apple expressed disappointment, arguing that its income had already been taxed in the US and that the EU was attempting to change the rules retroactively.

Ireland, too, had challenged the ruling despite benefiting from the corporate taxes of large tech companies. The country’s low tax rates had attracted giants like Apple to establish European headquarters there. However, in a shift that signals broader changes in global tax policy, Ireland has since agreed to align with new international tax standards, even though its multinational tax take continues to grow.

On the same day, the European Court also ruled against Google in a separate antitrust case. In 2017, the European Commission fined Google 2.42 billion euros for abusing its market dominance by promoting its shopping service over smaller European rivals. Google appealed the decision but was met with a firm rejection. The court ruled that Google’s practices were discriminatory and did not constitute fair competition on the merits. Google, like Apple, voiced disappointment with the decision, though it claimed to have changed its business practices since the original ruling.

The ruling adds to the 8.25 billion euros in antitrust fines Google has accumulated in Europe over the past decade. The company continues to face scrutiny, with ongoing cases related to its Android operating system and AdSense advertising platform and an investigation that could lead to selling parts of its adtech business.

Why does this matter?

The decisions against Apple and Google reflect a broader movement within Europe to challenge the power of Big Tech. These cases are part of a growing trend where governments seek to hold multinational companies accountable for their tax practices and market behaviours. Other major corporations, such as IKEA and Nike, are also under investigation for their tax arrangements as regulators across the globe attempt to reshape the corporate landscape and foster a fairer competitive environment.

Musk denies xAI-Tesla collaboration claims on AI technology

The CEO of Tesla has denied claims that his AI startup xAI had entered discussions to share future Tesla revenue in exchange for giving the automaker access to its technology. The Wall Street Journal reported that Tesla was considering licensing xAI’s artificial intelligence models to enhance its full self-driving software and splitting revenue with the startup.

Musk refuted the report, stating that although Tesla had benefited from conversations with xAI engineers, there was no need to license any technology. He called the article ‘not accurate’ in a post on social media platform X.

The Journal’s report suggested that xAI could also help Tesla develop other features, such as a voice assistant for its electric vehicles and software for its humanoid robot, Optimus. Musk has previously mentioned that xAI could play a role in advancing Tesla’s self-driving capabilities and building a new data centre.

The billionaire launched xAI last year to rival OpenAI, with plans to integrate its AI chatbot, Grok, into Tesla’s systems. Discussions have reportedly taken place regarding a potential $5 billion investment in xAI by Tesla.

Google loses appeal over €2.42 billion EU fine

Google has lost its appeal against a €2.42 billion fine imposed by the EU over antitrust violations. The European Commission initially penalised Google in 2017 for giving its price comparison service an unfair advantage over smaller competitors. Despite challenging the decision, the Luxembourg-based Court of Justice of the EU upheld the ruling, emphasising that while dominance is not illegal, its abuse to hinder competition is prohibited.

The fine is part of a larger pattern for Google, which has faced fines totalling €8.25 billion over the last decade for various antitrust violations. Two additional cases involving Google’s Android system and AdSense are still pending decision. At the same time, a separate investigation threatens to force the tech giant to sell off part of its advertising technology.

The ruling highlights the EU’s firm stance on competition as regulators continue to scrutinise the practices of dominant tech companies like Google.

Beijing condemns Dutch move to align with US chip restrictions

China has expressed dissatisfaction with the Dutch government’s decision to extend export controls on ASML’s chipmaking equipment. The Dutch government announced it would expand licensing requirements on ASML’s 1970i and 1980i DUV lithography machines, aligning its policies with the US export restrictions introduced last year.

China has criticised Washington’s efforts to pressure allies like the Netherlands and Japan to impose restrictions that limit Chinese access to advanced semiconductor technologies. Beijing described the move as part of the United States strategy to maintain global dominance and strongly opposed the measures.

In its statement, China urged the Netherlands to avoid abusing export controls, emphasising that such actions could harm Sino-Dutch cooperation in the semiconductor sector and damage business interests on both sides. Dutch Trade Minister Reinette Klever defended the decision, saying it was made in the interest of safety.

The Dutch restrictions have effectively blocked ASML, the world’s largest chipmaking equipment supplier, from sending its most advanced lithography systems to China, impacting China’s ability to produce cutting-edge semiconductors.

US DoJ takes Google to court over monopoly

Google is facing another antitrust battle in a Virginia court, where the US Justice Department has accused the tech giant of monopolising the online advertising industry. Prosecutors argue that Google controls the infrastructure that handles hundreds of thousands of ad sales each second, using its size and dominance to push out competitors and restrict customer choice.

The trial, which US District Judge Leonie Brinkema is hearing, focuses on claims that Google acquired rivals and manipulated market transactions to gain control over both advertisers and publishers. The government’s case highlights how Google allegedly stifled competition and locked customers into its products, tactics reminiscent of traditional monopolies.

Google’s defence, led by attorney Karen Dunn, refuted the accusations by arguing that the case is based on outdated market conditions. She noted that Google now faces significant competition from other major tech companies like Amazon and Comcast and that its tools have evolved to work alongside its rivals.

As the trial progresses, prosecutors push for Google to be forced to sell off essential parts of its ad business, including Google Ad Manager. The case is part of a broader effort by US authorities to curb the dominance of Big Tech, with other lawsuits targeting companies such as Apple, Meta, and Amazon.

Small ad-tech firms fear Google’s Privacy Sandbox impact

Smaller ad-tech companies are raising concerns over Google’s Privacy Sandbox, a proposed alternative to cookies, as they fear it could further consolidate Google’s dominance in digital advertising. Privacy Sandbox, which aims to enhance user privacy by anonymising data and targeting groups rather than individuals, has been under development for five years. US and UK regulators are investigating whether the new system could give Google too much control, potentially harming competition in the market.

Smaller firms argue that the costs of adapting to Privacy Sandbox put them at a disadvantage compared to larger competitors with greater resources. While large firms like Index Exchange can afford to invest minimal portions of their revenue in the transition, smaller companies face higher financial risks and extended development costs, threatening their ability to compete effectively.

Google defends Privacy Sandbox as a way to support a competitive marketplace, but experts say regulatory intervention will be critical to ensuring fair competition. Despite these concerns, some industry insiders believe regulators will prevent Google from consolidating its power through the new technology.

Google faces new remedies in US DOJ antitrust case

The US Department of Justice plans to outline by December the steps Alphabet’s Google must take to restore competition after being found guilty of illegally monopolising the online search market. Prosecutors have not revealed specific remedies but indicated that their proposal would be comprehensive and consider Google’s plans to integrate AI into its search operations, including rebranding its AI product to Gemini.

Potential actions include requiring Google to divest certain business units, such as its Android operating system, or stopping billions in payments to ensure its search engine remains the default on devices and browsers. Google’s legal team argued that they need a detailed proposal from prosecutors to prepare a response, possibly involving information from AI rivals like Microsoft and OpenAI.

Google has said it plans to appeal the ruling, and US District Judge Amit Mehta suggested a possible hearing in the spring, with a final decision expected by next August.

Google faces competition scrutiny over Android Auto app block

Google’s refusal to include Enel’s e-mobility app, JuicePass, on its Android Auto platform may violate competition rules, according to an adviser to Europe’s top court. The Italian antitrust authority previously fined Google €102 million ($113.2 million) in 2021 for blocking the app, which helps drivers navigate and manage messages from their dashboards.

Court Advocate General Laila Medina supported Italy’s stance, arguing that Google’s actions could breach competition laws by unfairly excluding third-party apps and harming consumers. Google had cited security concerns and the lack of a specific template for the app, but it has since taken steps to address these issues, adding the necessary template for compatibility with Android Auto.

The Court of Justice of the European Union (CJEU) will make the final decision, which is expected to rule in the coming months. Google has stated it is working to resolve the issue and is already offering similar apps globally on Android Auto.

US introduces new export controls on advanced tech

The United States has announced new export controls targeting advanced technologies, including quantum computing and GAAFET chip technology, aligning with similar measures by international partners. The updated regulations cover quantum computing equipment, advanced semiconductor production, and additive manufacturing technologies.

Commerce official Alan Estevez emphasised that these controls aim to keep pace with technological advancements and enhance their effectiveness through international cooperation. The most notable changes involve stringent reporting requirements for foreign national employees working on quantum computing in the US, while GAAFET controls will focus on production rather than design.

Trade lawyer Kevin Wolf highlighted that while these measures are intended to safeguard technological advancements, they might impact hiring in the quantum sector. Celia Merzbacher from the Quantum Economic Development Consortium expressed concern that these reporting requirements could deter small companies from hiring foreign talent, potentially limiting their access to skilled professionals crucial for innovation.

Telecom giants urge European policymakers to enhance digital competitiveness through improved connectivity

Ericsson, Nokia, and Vodafone have united in a call to action for European policymakers to enhance digital competitiveness through advanced connectivity and digitalisation. They argue that achieving a true Digital Single Market is essential for fostering innovation and ensuring Europe can compete globally. The following initiative emphasises the need for coherent implementation of existing regulations and the avoidance of unnecessary regulatory burdens that could hinder the rapid deployment of digital infrastructure.

Ericsson, Nokia, and Vodafone highlight the importance of incentivising investment in advanced connectivity solutions, such as 5G and future 6G technologies. They stress that a modernised regulatory framework is crucial for maintaining healthy telecom operators capable of making substantial investments in infrastructure. This includes advocating for longer spectrum licenses and harmonised rules across the EU member states, facilitating a more robust telecommunications landscape.

Ericsson, Nokia, and Vodafone also propose that policymakers differentiate between business-to-business (B2B) and consumer-facing technologies when crafting regulations. Tailoring regulations to these sectors’ specific needs and operational structures will help create a more level playing field and address market failures effectively. This distinction is vital for fostering an environment where trusted companies can thrive and innovate.

Ericsson, Nokia, and Vodafone highlight the need for Europe to prepare for emerging technologies like quantum computing and AI. They advocate for policies encouraging experimentation and attracting private investment, ensuring Europe can leverage these advancements while addressing security challenges.